San Francisco Passes Sweeping Building Energy Efficiency Law

Yesterday the San Francisco Board of Supervisors approved groundbreaking policy aimed at transforming commercial buildings from the biggest energy users in the city to the biggest energy savers.

The newly adopted “Existing Commercial Building Energy Performance Ordinance” requires commercial property owners to measure and rate, or “benchmark” the energy performance of their buildings and make energy ratings available to the public. The ordinance also requires owners to conduct energy audits every five years.

While benchmarking and auditing will be relatively new practices for smaller building owners, many large property managers already use these proven energy-saving techniques, including those profiled below.

This decision comes just a week after President Obama unveiled his “Better Buildings Initiative” aimed at reducing energy use in buildings by 20 percent by 2020 by improving the energy efficiency of buildings.

Benchmarking building energy performance is widely regarded as the critical first step that owners can take to start taking control of energy use and costs; and more cities and states are starting to require owners to do so, including Seattle, New York City, Austin and Washington D.C. and California and Washington state.

Below is additional information on San Francisco’s new law and similar efforts around the nation:

Pulling the Plug on Energy Waste: San Francisco’s Building Energy Performance Ordinance

BACKGROUND

Energy is one of the biggest expenses of building ownership, and will be an even greater financial burden for owners in the future as energy prices escalate. Owners that are not taking steps to control energy use and costs now risk getting squeezed out of the market later.

Buildings, which account for about 70 percent of the electricity consumed in the U.S., could be made up to 50 percent more energy efficient with currently available products and services. But most owners don’t know how well or poorly their buildings use energy, and unknowingly waste hundreds and even thousands of dollars each month paying unnecessarily higher energy bills.

At the same time, consumers have no way to compare the potential energy use and costs of buildings they plan to buy or rent—they, too, are paying more for energy than they need to be.

Under the newly passed ordinance, commercial building owners are required to annually “benchmark” (see below) the energy use of their buildings and conduct energy audits of buildings every five years. Energy reports would be made public on an annual basis. The rules apply first to commercial properties larger than 50,000 square feet starting in October 2011, and then phase in so that by 2013, the rules would apply to all commercial properties 10,000 square feet or larger.

WHAT IS BENCHMARKING?

“Benchmarking” is the process of measuring the energy use of a building and comparing it to othersimilar buildings to obtain an energy rating. The U.S. Environmental Protection Agency offers a free online benchmarking tool called Energy Star Portfolio Manager (ESPM) that many owners currently use. ESPM scores range from 1 to 100, with a score of 50 being the average. A score of 75 or higher is needed to apply for an Energy Star label. Competitive building owners and property managers across the U.S. are already voluntarily benchmark buildings, including those listed in interview sources below.

WHY BENCHMARK AND AUDIT?

Owners can’t take control of energy costs if they don’t know where to begin. Benchmarking and auditing are critical first steps that tell building owners where they stand and what steps they can take to save energy and money, and make their buildings more competitive. According to Blake Peterson, Senior Property Manager at Ashforth Pacific of California:

“Benchmarking and auditing are the only ways to know what the opportunities for energy improvement are. Reducing energy costs is likely the single most significant way to increase operating income and appeal to future tenants, investors, and owners. Keep in mind that your competition is benchmarking and auditing, so not doing so puts you at a competitive disadvantage.”

Numerous studies show that energy-efficient buildings, especially those with good energy ratings, command higher rents, sell for more money and have lower vacancy rates than other buildings.